Quiz 4: Planning and Forecasting
Planning is the most important and occupies the first step in the managerial function. It is the first step in managerial function and all the other activity is related to planning. In other words, planning is the means of deciding objective and plan for future course of action. An important case could be taken as an example. For every startup business, the person requires to set an objective and plan resource, money, study market trend, lead time etc. A case can be taken as manufacturing unit where during production of new product, the firm has to plan the raw material to make final product. A raw material could be source from any vendor. After procurement of raw material from reputed vendor, this raw material is processes into final product. From procuring of raw material to final products, it requires planning.
Moving average: It is a quantitative forecasting technique to calculate the forecast for the next period. In this method, the forecast is calculated based on the time series analysis. a. Consider the data of sales given below: Calculate moving average forecast of 2013 as shown below: Thus, the sales forecast for 2013 is . b. Calculate the forecast for 2013 from weighted average as shown below: Thus, the weighted average forecast for 2013 is .
The planning process can be summarized by the following steps. • First the planner should specify what he is planning for. • Second, the planner should collect information relevant to making an effective plan. • Third, the planner has to analyze the data and come up with an optimal plan based on the data. • Fourth, the plan has to be implemented and proper supervision should be done. • Fifth, success of the plan should be compared with the standards set. • Finally, planning can be conducted as an iterative process based on the outcome.